When Microsoft introduced this week that it was shedding 10,000 workers, it wasn’t precisely a shock. Different huge corporations, together with Salesforce, Amazon and Meta, have already been down that street, and the information leaked far and broad earlier than the official announcement on Wednesday. Alphabet joined in right now, saying one other 12,000 job cuts.
Like these different corporations, Microsoft is going through a shifting financial panorama and making changes to a workforce that was pumped up after the early days of the pandemic. Every of those corporations added tens of 1000’s of workers to the payroll, and with the present financial uncertainty, they determined to dial it again (or at the very least use it as an excuse to chop prices).
Take into account that Microsoft had over 220,000 workers on the finish of final yr, in response to Statista. That’s up from 163,000 in 2020 and 181,000 in 2021, which means the corporate added greater than 57,000 workers in a two-year interval earlier than slicing 10,000 this week.
Knowledge visualization by Miranda Halpern, created with Flourish
It’s not clear the place the cuts are coming from, and there was no official phrase from Microsoft. Bloomberg reported that engineering teams could be reduce whereas additionally reporting that the HoloLens group took a success after dropping an enormous protection contract. Geekwire reported that there have been huge cuts to the Nokia group. Microsoft wouldn’t remark when requested by TechCrunch the place the cuts have been happening.
This layoff represents a drop within the bucket for Microsoft financially, however it has a really actual impression on the ten,000 individuals who have been informed they might be let go this week.
Microsoft hasn’t precisely been doing poorly, incomes over $200 billion final yr whereas committing $69 billion to pay for gaming firm Activision Blizzard nearly precisely a yr in the past. Right now, it has a market cap of over $1.7 trillion — that’s with a T. In a submitting with the U.S. Securities and Alternate Fee reporting the layoffs, the corporate indicated that it’ll write off $1.2 billion in prices associated to the layoffs within the second quarter.
All of that is to say that this layoff represents a drop within the bucket for Microsoft financially, however it has a really actual impression on the ten,000 individuals who have been informed they might be let go this week. If it was to impress traders, to this point it’s not working — its inventory ticked down within the days following the announcement earlier than rebounding Friday.
With all of these monetary sources, the query is why. What does Microsoft acquire by slicing its workforce 5%? We spoke to some analysts to attempt to determine it out.
A reasonably good yr
First, let’s take a fast take a look at Microsoft’s financials. Firms normally reduce prices as a result of the enterprise now not helps the workforce, however Microsoft has had a reasonably first rate yr, because the chart beneath reveals: